Why Seeking More Money Hurts Happiness

Americans have been on a decades-long march toward greater material rewards, social and professional status, and physical appearance. And there are signs that we have become much less happy as a result.

People pursue life goals that reflect different mixes of what social scientists call intrinsic and extrinsic motivations. "The intrinsic factors are about personal growth and self-knowledge, connections and social intimacy with other people, and wanting to help the human community for altruistic reasons," says Kennon Sheldon, professor of psychology at the University of Missouri. Extrinsic goals, he says, are about "money, luxury, appearance, attractiveness, status, popularity, looks, and power."

People don't always consciously choose their personal motivators or even set out with a clear idea of what they want. Surveys show that people believe intrinsic goals are the most meaningful. But in practice, people in nearly all nations actually pursue extrinsic goals in their life choices. And Americans are at the top of the list in being motivated by extrinsic factors. "Back in the 1960s, many college students felt that developing a life philosophy was the most important thing they could do, and material prosperity was not important," Sheldon says. "Today, those two things have been flipped."

There have been countless social-science studies of how values are linked to personal well-being and happiness. And there are many nuances in the findings. But for the most part, it seems that people driven by intrinsic goals are significantly happier than those motivated by extrinsic goals.

"When people really focus on those extrinsic values, they end up having a worse psychological satisfaction of their needs, and they are less happy as a result," says Tim Kasser, professor of psychology at Knox College Galesburg, Ill. In studies throughout the world of people in all income groups and demographics, he says, "it's a fairly robust finding in that it seems to turn up over and over again."

Beyond the perception of greater dissatisfaction and unhappiness, there are physical effects. "We've found that people who are more focused on extrinsic values have more headaches and stomach aches, and that children [in extrinsic-focused societies] experience these things as well, and also have more sleep problems."

Jean Twenge, professor of psychology at San Diego State University, has studied detailed records of the shifting well-being and cultural values of more than nine million U.S. high school seniors and college freshman over many decades. What she found was a steady increase in stress, mental health problems, and related signs of unhappiness. Young people are becoming increasingly unhappy, and there is a direct correlation between this sustained shift and an equally pronounced trend in the United States toward greater adoption of extrinsic life goals.

"Younger generations are shaped the most by the culture," notes Twenge, who is also the author of the book Generation Me. Today's prevailing cultural norms are the only ones that younger people have experienced, and thus have a big impact. Older people, by contrast, are changed less by current cultural changes because their impact is blended into past experiences.

"Extrinsic values tend to be correlated with narcissism and a high sense of self," she says, leading to emphasis on self-absorbed material pursuits. At the same time, people are convinced they have no choice. "They say, 'We have to be this way because the world is so competitive,'" Twenge says. "They have become convinced that the way to succeed is to become very self-focused, and to get money, fame, and image. However, narcissistic people don't do better," she concludes. "That's a myth."

The pursuit of money and materialism play a central role, especially in America. Kasser says our consumption-driven economy bombards Americans with commercial messages about the desirability of material consumption. Our form of capitalism, he says, is actually hostile to intrinsic values because greater adoption of those values would lead to lower consumer spending.

Extrinsic goals may not promote optimal happiness and well-being, but that's not to say money isn't associated with substantial amounts of life satisfaction. Money buys things we need and value. How much money we make compared to other people--our relative income--is strongly related to satisfaction and happiness. "Money buys happiness for a person, and quite a lot of it," says British economist Andrew Oswald. "The evidence suggests that people care intensely about their relative income. This shows up in brain-scan evidence and in happiness equations."

If having money makes us happy, spending lots of it, by contrast, does not seem to do so. When we buy an expensive item, it turns out, our joy in having it fades over time. This trait, given the name "hedonic adaptation" by social scientists, helps explain why having lots of possessions may provide us some sense of satisfaction but not lasting happiness. In recent years, the rising field of behavioral economics has uncovered additional insights about differences between the perceptions that motivate us and the actual results of our efforts. As it turns out, people are often very out of touch with what they really want. Nowhere is this truer than when it comes to money.

Psychologist and Nobel prize winner Daniel Kahneman breaks the idea of subjective well-being and happiness into two components: the emotional well-being shaped by everyday experiences, and a person's cumulative life evaluation. Many researchers find that life evaluation does not benefit from money, beyond having enough to meet basic needs. Kahneman disagrees, and finds that higher income improves a person's life evaluation even among people who are already wealthy.

However, he found in research that there is a ceiling of about $75,000 a year in how much people need to achieve their maximum amount of emotional well-being. People making more than this amount of money did not feel they gained additional happiness, the research found. "More money does not necessarily buy more happiness," he said. "But less money is associated with emotional pain." Oswald, by contrast, thinks Kahneman's findings warrant more research.

If the things we think are important (intrinsic goals) are not reflected in how we actually behave (extrinsic goals), what should we do? Kasser and others point to a small but growing effort, mostly in Europe, to stop associating our well-being solely with economic growth. The notion of Gross Domestic Product, he says, should be expanded or replaced with a measure that includes physical and mental health plus other measures of well-being and happiness.

It could also help for people to spend more time thinking about their goals, how well they are meeting them, and whether they are happy with their choices. Kasser has developed an Aspiration Index that uses 40-odd questions to help people understand where they are on the intrinsic-external value scale.

A simple exercise developed nearly 50 years ago called the Cantril ladder is still widely used as an accurate self-evaluation to help people think about their life goals and measure their well-being. It asks people to assume that there's a ladder with steps numbering from zero at the bottom to 10 at the top. The best possible life would be a 10 and the worst life a zero. Which rung are you standing on right now? Which rung do you think you will be standing on in five years?

Wall Street stocks rose early Friday, adding to a string of records on continued bullish sentiment about the US economic outlook as well as the European Central Bank's stimulus. About 35 minutes into trading, ... … More »

Shares in Capita (CPI.L) fell further on Friday after a profit warning and the decision to sell its asset management business left investors questioning the British outsourcing group's strategy. The company's financial problems since the vote to … More »

Rosneft said on Friday it has enough oil to fulfil new contracts with Swiss trader Glencore as markets gear up for a fierce battle between some of the world's largest merchants for supplies from the Russian company. Moscow said this week that a … More »

Shares in troubled Italian bank Monte dei Paschi di Siena have plunged after news reports that the bank's request for more time to raise new capital from investors has been rejected by regulators. Shares ... … More »

U.S. stocks opened higher on Friday, extending a post-election rally, with gains in healthcare and technology sectors lifting the Nasdaq and the S&P 500 to fresh all-time highs. The "Trump rally" has been running since the Nov. 8 vote as investors … More »

The estimated cost of cleaning up Japan's wrecked Fukushima nuclear plant has doubled to nearly 22 trillion yen ($190 billion), with decommissioning expenses expected to continue to increase, a government ... … More »

Coca-Cola Co said Muhtar Kent would step aside as chief executive in May, after nine years at the helm, and be replaced by company veteran James Quincey, a widely anticipated move that comes as it tries to reduce dependence on its mainstay sugary … More »

SINGAPORE/TOKYO/DUBAI (Reuters) - Saudi Arabia has told its U.S. and European customers it will reduce oil deliveries from January as Russia signalled that a commitment from non-OPEC producers to join OPEC's output limits still faced challenges. … More »

Wall Street stocks opened higher Friday, adding to a string of records on continued bullish sentiment about the US economic outlook as well as the European Central Bank's stimulus. Five minutes into trading, ... … More »

The European Central Bank contemplated even bolder stimulus measures than it agreed at Thursday's meeting but scaled back in a compromise move when conservatives, joined by several swing voters, pushed back, two sources with direct knowledge said. … More »

FRANKFURT/ZURICH (Reuters) - Swiss aircraft manufacturer Pilatus Aircraft is considering listing its shares in an initial public offering next year which could value the firm at around 3 billion Swiss francs (2.34 billion pound), according to two … More »

The latest on developments in financial markets (All times local): 9:35 a.m. Stocks are opening moderately higher on Wall Street, keeping major indexes at record high levels Health care and technology ... … More »

While the moves were designed to restrict currency movement out of China, investors in gaming stocks are particularly sensitive to measures by tighten capital controls. China is trying to moderate Macau’s growth by reducing travel visas and … More »

The European Central Bank has rejected a request by Italy's Monte dei Paschi di Siena for more time to raise capital, a source said on Friday, a decision that piles pressure on the Rome government to bail out the lender. Italy's third-largest bank, … More »

Tag Heuer's renaissance is far from over, its chief executive told Reuters, adding the high-end watch brand still had room to expand in China and other markets after some of the strongest sales growth in the industry this year. LVMH's (LVMH.PA) … More »

Quincey, 51, joined Coca-Cola in 1996 and became chief operating officer in August 2015. "I know James and like him, and believe the company has made a smart investment in its future with his selection," Buffett said in a statement. The move comes … More »

Onfido Onfido’s co-founders, from left, Husayn Kassai, Ruhul … Continued The post Another Google employee jumped ship to join identify-checking startup Onfido appeared first on Business Insider. … More »

The German government says it has stopped the vetting process for a Chinese firm's purchase of chipmaker Aixtron SE after the U.S. government nixed the takeover. President Barack Obama last week ordered ... … More »

German semiconductor chipmaking machinery company Aixtron (AIXGn.DE) may sell off part of its business, its chief executive said in an interview published on Friday, opening the door for bidders after a deal with a Chinese company collapsed. … More »

Dec 9 (Reuters) - Malaysian Resources Corporation Bhd * Deal for total cash consideration of 24.8 million rgt * Acquisition is not expected to have any effect on the EPS of MRCB group for the FYE 31 december ... … More »

Japanese conglomerate Sumitomo has agreed to buy European banana king Fyffes for 751 million euros, both groups said Friday, in a fresh sign of the fruit's booming popularity worldwide. The Dublin-based fruit importer and distributor, best known … More »

Trending Now

Quotes are real-time for NASDAQ, NYSE, and NYSEAmex when available. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.